In a case that exposed the dark side of hiring practices in the tech industry, Apple, Google, Intel and Adobe on Thursday opened their checkbooks to avoid an embarrassing trial by settling a major lawsuit that alleged they colluded for years to not poach each other's employees.

The settlement, disclosed in a letter to the federal judge handling the case, did not reveal the amount of the pact, but Reuters reported the figure was around $324 million. The valley employees who sued over the "no poaching" agreements were expected to demand at least $3 billion from a jury if the legal fight had moved to a late May trial.

A sign in front of Google's offices in Mountain View. (Bay Area News Group archives)

More than 64,000 valley employees in the class action lawsuit, many of them in jobs such as software engineering that form the lifeblood of the local tech economy, stand to benefit from the deal. In addition to Thursday's settlement, Lucasfilm, Pixar and Intuit settled last year with the employees for about $20 million.

Experts on the valley economy say the case could have a ripple effect on the booming job market for engineers and other tech workers. The employees in the lawsuit have maintained the anti-competitive conduct of major tech companies suppressed pay throughout the valley.

Advertisement

"This settlement should result in much higher salaries for folks who are in high-demand positions," said Rob Enderle, principal analyst with Enderle Group, a San Jose-based market researcher. "You will start to see bidding wars between companies, and those will start to drive salaries up."

For companies such as Apple and Google, the looming trial was believed to have spurred the settlement, as each valley powerhouse confronted the prospect of open-court allegations that top executives, including late Apple CEO Steve Jobs and former Google CEO Eric Schmidt, cut secret deals to prevent job movement in the tech sector.

Apple and Google declined to comment. Intel and Adobe both denied any wrongdoing in their recruiting practices, saying in statements they "elected to settle this matter in order to avoid the risks, burdens and uncertainty of ongoing litigation."

Kelly Dermody, a lawyer for the workers, declined to discuss specifics of the settlement or whether it would affect valley hiring practices. The plaintiffs' lawyers stand to earn millions in legal fees from the settlement.

The case already has blown the lid off the way the valley's most powerful executives dealt with the region's hypercompetitive job market, revealing internal emails with damaging remarks about suppressing recruitment between 2005 and 2009. In one such 2005 email exchange, Jobs reportedly warned Google co-founder Sergey Brin about recruiting Apple workers: "If you hire a single one of these people, that means war."

Recently released documents show that one valley power, Facebook, rebuffed pressure to take part in the no-poaching agreements. Sheryl Sandberg, Facebook's chief operating officer, is quoted in court papers saying she declined in 2008 "to limit Facebook's recruitment or hiring of Google employees."

U.S. District Judge Lucy Koh in a recent ruling noted how Facebook refused to take part in "Google's anti-solicitation agreements." The judge has repeatedly found there was ample evidence of anti-competitive conduct for the case to go to trial.

The settlement is expected to be given by May 27 to Koh, who must approve it. Summing up the case last year, the judge wrote: "Indeed, the sustained personal efforts by the corporations' own chief executives, including but not limited to Apple CEO Steve Jobs, Google CEO Eric Schmidt, Pixar President Ed Catmull, Intuit Chairman Bill Campbell and Intel CEO Paul Otellini, to monitor and enforce these agreements indicate that the agreements may have had broad effects on defendants' employees."

If the trial had gone forward, the employees were going to rely on experts to testify they were entitled to the $3 billion in damages -- an amount that could have been tripled under federal antitrust law. Experts for the companies had countered in court papers that the conduct did not cost workers much, if any, money and disputed claims that it discouraged engineers and others from switching employers.

The companies settled a similar antitrust case filed by the U.S. Justice Department in 2010, agreeing not to restrict recruiting or hiring from their rivals. The Justice Department has an identical antitrust case against eBay pending in federal court.

The settlements, experts say, could even benefit specialists such as headhunters who find employees for tech companies.

"It's already pretty competitive," said Michael Tchong, founder of Social Revolution, a San Francisco firm that tracks the tech sector. "Companies are splitting stock to increase the pool of stock so they can offer employees stock option deals. Anything that helps employees, I'm all for it."

Staff writer George Avalos contributed to this story. Howard Mintz covers legal affairs. Contact him at 408-286-0236 or follow him at Twitter.com/hmintz.